FAQ's about short sales

Everyone has heard the talk of short sales but alot of buyers and sellers really don't know much if anything about a short sale. A short sale is an agreement with the lender,(or more than one lender) to accept less money than what is owed by the borrower via the sale of the property to a non-related third party. When the borrower has fallen behind in mortgage payments or has had some kind of hardship,then the short sale may be an alternative for distressed homeowners.

That's the short of it(no pun intended). There are many hoops one must go through first.

Starting the process: do it asap before the lender contacts you.

Find out if you even qualify for a short sale. You must prove to your lender that you are a victim of a hardship. That could be divorce, health or medical bills, death of a spouse (income earner), failed business, employment relocation.

A short sale will affect your credit but not as much as a foreclosure.

Tax ramifications of a short sale were forgiven through the mortgage forgiveness debt relief which is extended through 2012 depending on your situation. It may be different on a state level-the tax payer may or may not face tax consequences depending on circumstances.